21
Oct
07

The “Cost of Living”; 1957 vs. 2007

It is time for me to post some more sobering statistics.  This time around I want to compare what it costs to live in America today verses fifty years ago in 1957.  To put this in perspective, 1957 is considered to be the height of the baby boomer generation.  Dwight D. Eisenhower was the United States President and Richard Nixon was the Vice President.  There were around 170 million people living in this country (compared to 300 million today).  The 1957 Best Picture of the Year (The Bridge on the River Kwai) grossed $27,200.  So far in 2007 the movie “The Departed” grossed $125 million.  No one owned a computer fifty years ago.  The only games were “board games” and make believe games.  Girls still wore dresses and guys still dressed up to take a girl on a date.  Mothers stayed at home to raise the kids and fathers were happy to be the breadwinner of the family.

A lot has changed in fifty short years.  The United States of America bears little resemblance to the country bearing its name not even two generations ago.  States that were mainly deserted deserts fifty years ago are now the fastest growing states in the country (Arizona, Nevada and Utah).  Areas that were farms fifty years ago are now cities with hundreds of thousands of people.  There was only one Interstate Highway fifty years ago and that was I-70.  Now people can travel all over the country on multi-lane super highways going pretty much as fast as they want. 

In 1957, the average income of America’s 44 million families (according to the United States Commerce Department) was $5,000.  There were actually 4 million families whose income was over $10,000.  There were also 6.5 million families whose annual income was under $2,000.  The vast majority of American families, 33 ½ million of them, had annual income between $2,000 and $10,000.  In 2006, the average income for an American family was $48,000.  In fifty years the average income had increased tenfold.  The main difference between 1957 and 2006 is that most families need two incomes to reach the $48,000 figure whereas fifty years ago only the father usually worked.  Logic dictates that if annual income has risen tenfold in fifty years, then the cost of most items has probably risen about the same.  This logic is correct in many categories, but horribly flawed in one huge area.

In 1957 the average price for a gallon of milk was $1.00.  Today, that gallon of milk averages around $3.00.  It really is quite amazing that something as vital as milk has only tripled in price in 50 years.   The price of most other things has definitely gone up much more rapidly and dramatically.

In 1957 gasoline averaged around .30 per gallon.  This should not be surprising since only a few years ago it was still under a dollar.  But, even if you took the high average today of $3.00, that is only a tenfold increase in 50 years in one of the most volatile commodities on the market.  Of course at the rate of increase gasoline has gone up, that would put a gallon of milk at $10.  Thank God the rate of inflation for milk has not kept up with oil.

Fifty years ago, the postage stamp was 3 cents.  Now it is 41 cents (at least this week).  Calculating the difference in the cost of a loaf of bread is a little more difficult.  There are so many kinds of bread out there today that it is very hard to compare apples and apples, but in 1957 a loaf of bread cost 19 cents and today the range is from $1.90 to 3.90.  A dozen eggs cost .28 fifty years ago and many times they cost barely over a dollar today.   

Most things that are still bought and sold today are about 10 times more expensive than they were fifty years ago.  Even “big ticket” items follow this same rule of thumb.   The average cost of a new car in 1957 was $2,100.  Today, the average price for a new vehicle is $27,958.  Although vehicle prices have gone up more than 10 times, the average for today’s vehicles includes SUVs and luxury cars.  It also takes into account the incredible advances in technology found in today’s vehicles. 

It is very interesting to note that in all the years my dad bought and sold vehicles (1932 through 1989), he always paid cash for the new vehicle.   “Back in the day”, no one ever financed a car except possibly through a credit union or a family loan. Today, the average new vehicle loan works out to $378 per month for 63 months!  Considering that a new vehicle loses 70% of its value in just 48 months, what exactly do people have to show for the $4,536 per year, or the $18, 144 they pay in four years of vehicle payments?  A used vehicle worth 30% of what they paid for it.

Here comes the statistic I have been leading up to all this time.  In 1957, the average price for a house in the United States was $2,330.  Can you believe that!  A house and a car cost roughly the same thing!  I know “normal” people who pay $2,330 per month to rent an apartment.  Just 50 years ago, this figure represented the average price for a house in this country.

Now consider what the average price is today (not taking into account the current depressed prices due to the sub-mortgage crises); which is $212,800.  The average price of a house fifty years ago represented 50% of the annual income for the average family.  The median price today is four times MORE than the average family makes in a year.  This statistic explains why Americans today are saddled with a debt load that destroys marriages and causes the current unheard of foreclosure rates. Families simply cannot afford the home they live in.  This is NOT  a good thing.   

In 1958 my parents purchased a modest home in a nice residential neighborhood in Wichita, Kansas.  The house cost about $8,000 and their monthly mortgage payment was a little over $100 per month.  Today, the average family in this country has a house payment of around $1,250 per month.   All things being equal, if nothing else had changed between 1957 and today; then the amount paid each month for the house payment would not be much different than fifty years ago (the rule of things increasing tenfold), but all things are not equal.

Most people fifty years ago bought a house and lived in it for most, if not all of the 30 years of the mortgage.  Today, people want to move into bigger and fancier houses after a few years.  They never get to an equity position.  If they do, they get home equity loans for toys, vacations, and other “things” and suddenly have not only a house note, but also a home equity loan note.  Add in a couple of car loans, college loans and medical expenses.  Once again, people cannot afford the home they live in.

Our country has always taken pride in home ownership.  It is “The American Dream” after all.  But, if the current trends continue, no one will be able to afford the home they live in.  Instead of moving up, they will be forced to move down to housing they can afford.  This is not the American way of thinking.  People are not used to having less and less.  That flies in the face of the “bigger, better, more and more” mentality that has fueled so many of the problems now being encountered.

There was a time in this country, not too many years ago, when people simply “made do” with what they had and could afford.  With the advent of credit cards and cheap credit lines, people have been conditioned to get whatever they want, when they want it.  There is no financial discipline or maturity to speak of.  This ugly mentality is now being passed on the next generation who has been conditioned to have everything they want without working for it, saving for it or waiting for it. 

The old values learned by those who suffered through the Great Depression have died off with that generation.  The baby boom generation ushered in the greatest spending spree in American history.  With it has come utter incompetence in financial matters at home, within businesses and inside the government.  Perhaps a good recession or even a depression would not be all bad for this country.  At the very least it would provide a wakeup call to millions of people.  People might begin to understand that you can’t keep spending what you do not have without someday suffering the consequences for it.

For even more information on this topic, I just posted a new blog dealing specifically with the housing costs and how dramatic the upswing has been since 1960.  The title of the post is: The Cost of Housing: 1050% Higher than 1970 and Climbing.

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49 Responses to “The “Cost of Living”; 1957 vs. 2007”


  1. 1 Matt
    November 5, 2007 at 8:17 pm

    Don’t even think of showing the growth in government taxing, spending and sadly the growth of our defecit over that same period in time. It seems like the American people think that if they can’t afford it and can’t borrow enough to get it, then the government should step in and provide it to them at the cost of everyone else. The new American way has done nothing but prepare us for a time when these baby boomers start hitting retirement age and look to the government to keep them in housing, health care, medicine, food and other necessities because they couldn’t save anything during their productive years. At least we should all be able to afford a glass of milk. Excellent analysis. Also worth mentioning is the increase in size of the average home vs. the decrease in size of the average household over that period. Fewer people living in bigger houses.

  2. 2 Jimmy Carter
    December 16, 2007 at 7:15 am

    I am trying to do a study of compairing year after year prices tied to a raw material price that the producers has gotten and the price they get now and figure in the cost of living….from 1900 to present day….and I have no idea how to do that….can you help give me some idea of how to start or do you provide that service and if so how much…..need the following….Annual average wage…cost of average car and home…gas/bread/milk…dollar then to dollar now worth….cost paid to the producers and paid today…so as to show how little we get in todays market

  3. February 4, 2008 at 2:29 am

    The cost of living is about the same but our debt has increased exponentially due to credit cards and bad lending practices.

  4. 4 Linda
    March 7, 2008 at 1:27 pm

    I have always wanted to find this kind of information and excellent critique of where we’ve been to where we are now and where we’re headed ,economically speaking. I was born in 1952 and have long felt that at this point in my life, it is sooo discouraging to work hard and have so little to show for it. It seems that only a couple of years ago, I tought $100,000.00 was a lot of money, but today, when I see what a $100,000 house looks like, you just want to cry! Everythng’s gone up but salaries. If the average family income in the US is around $48,000, how in the world do ,seemingly , so many people live in these 250-300 thousand dollar homes? (Here in Texas, that will get you a pretty nice house.)

    Really like this blog!

  5. 5 Lexie
    March 18, 2008 at 4:04 am

    I am only 12, but we’re doing a “Year Project” in school, and we have to talk about major events, cost of living, jobs, inventions, etc. in the year that we get. I got 1957. I read this article and it is exectly what my teacher is talking about. Today’s economy is absurd! It’s unfair and just plain greedy and ignorant what the rich are presenting. They get everything they want,and it is mostly people like them that are causing all these problems. I’m not talking about the educated, deserving rich, but the ones that you actually see on TV with 42″ rims, no voices, topless(and sometimes nude) yet making billions. I want to twist their heads of or teach them a thing or two about real life. I can’t stand them: I hate what they stand for-It’s rude and disrespectful to women, I hate how they portray everything they stand for -It’s distguting, and I hate that they are making billions for doing something that many people can do 100,000,000 times better. And the thing I hate most, is that they don’t realize any of this. I’m really glad that a man like “P Diddy” of Sean Combs made a movie like Raisin in the Sun. He also won a decent amount of money on “Millionare” and I have learned to appreciate him. I worried that by the time I have a family, it will be 80 degrees outside during the winter, my 2 bedroom apartment will cost $6,000 a month, and I won’t be able to drive a car becuase gas will be $20 a gallon. PLus, my kids will never taste the deliousousness of cereal because, unless we buy a cow, milk will be $18 per gallon.

  6. 6 carlos9900
    April 21, 2008 at 6:17 pm

    Very nice reading. It seems the trend with the housing it’s about the same or worse around the world.

  7. 7 Corvidae
    May 23, 2008 at 9:59 pm

    In 1957 the highest tax rate was 91% for income above 400,000, as opposed to about 35% today. Of course using the 10x rule you have to look at people making over 4 million a year. Most of the people in that tax bracket receive large amounts of dividend income that is only taxed at 15%. That’s why even Warren Buffet complained his taxes were only 17.7% while his secretary was paying over 30%. And that doesn’t include money made in foreign countries that never enters the US so it’s never tracked by the IRS. Yes, you’re supposed to report it, but how many people are going to accurately report their profits to the IRS knowing they have no way to check?

    Other things to consider are that since women have joined the work force, they’ve effectively doubled the number of workers (They’re still not quite there, but getting real close) making the value of work drop. The gold standard has been dropped, we now have to import for energy needs and we’re competing with third world countries for labor costs. Add that on top of banks turning every trick they can to increase credit lending, and it paints a dangerous picture.

    Personally I still think the best answer is pirates. Drive up the cost of over seas shipping and local markets increase in value. And it gives the military/security freaks something to do.

  8. 8 markbaland
    September 23, 2008 at 9:45 am

    I just found this yesterday.
    It explains the history of money lending, interest,
    and credit in a simple fable format:
    http://www.startupjunkies.org/TheEarthPlus5Percent.pdf
    EVERYONE SHOULD READ THIS!

  9. 9 markbaland
    September 23, 2008 at 9:49 am

    The ruling, wealthy class is getting so rich and powerful that the only way for them to gain more wealth and power is to force the middle class into poverty. If we can’t afford houses, and have no benefits, and have few jobs and no job security, we will work harder and longer for less and less money, and pile into centralized ghetto apartments like the Nazis put the Jews in, so we can easily be monitored and controlled with no privacy, and keep our ugly, poor running cars out of there glittering gated communities, not to mention being to tired and beat-down to take time off work, which we won’t get paid for, being the lower class, to vote for candidates who say they represent us, but never do. Get the picture?

  10. 10 chetan dua
    April 23, 2009 at 8:22 pm

    fantastic report

  11. September 1, 2009 at 9:03 am

    Excellent post. The cost of living continues to skyrocket and debt numbers are the highest they have ever been.

  12. 12 Hector J. Negroni
    November 20, 2009 at 8:17 pm

    A sobering article, appreciate how clear it is. The good thing about it is that it makes you think; questions pop-up in your mind. Questions like: How can we stop this spiral of raising housing costs? Can it ever be possible to reverse it? Can we really be able to take control of our economy to the extent that we make it possible to have raising costs that are actually the effect of a shortage of some raw material supply?
    When will we learn that only a healthy and diverse in knowledge middle class is what needs to be protected to keep our way of life in tune to what we value in this country?
    Protecting the middle class I mean keeping a balance in our economy as a nation, helping them keep a balance in their home economy and teaching our younger generation to
    be responsible about their finances.
    Can we ever get back to having the father of a household be the sole bread winner? Not that it´s an advantage to have a mother who can also be in the job market, to speed up debt reduction or getting those extra things for the family. But, would n´t it be the answer to the spiral cost of education having all these educated mothers do home schooling to their own children? And what about the greed in wall street? The speculation of it all? I do n´t think greed was what started the idea of the stock exchange? How do we get rid of it?
    And the banking system, they saw how the middle class was becoming more and more poor at the expense of their huge mortgage profits? How do we fix that?
    Questions and questions keep coming up, but I know the last one is: Why not? Lets work on this ¨the American experiment¨ like our forefathers did, with integrity, humility,
    looking towards our future generations, making things happen now and for the future with
    commitment towards others well being. Let´s be the America all nations looked up to as a beacon of freedom, liberty and justice for all just a little more than 50 years ago.

  13. 13 david sant
    December 5, 2009 at 6:44 pm

    David UK 1957/ 2009. Almost everything(except housing) in this country has risen by a factor of 50!!YES 50 TIMES ..The average semi detached house in 1957 cost £2OOO, today ,almost £2OO.000 a 100 times increase in value,My wage as an Electrician in 1957 was £10 per week,today if I was still working ,it would be £500 per week.
    It is worth remembering that while US housing purchase in 1957 represented half a years average wage, In the UK it took 4 years salary!!8 times as much..Tight planning controls,make it almost impossible to build any form of dwelling,particularly in rural areas.
    Plots of land that are available in the country fetch approx £200 per sqare yard or £250K PER .25ACRE.To build a small 3 bed bungalow another £130k.What would you purchase in the states for $600k ???.I would be delighted if i could fill my car for 62pence per gallon instead of £5 (8$)per gallon.
    The US, during the past 50 years has seen an almost continuous rise in prosperity,good luck to them!! Complacency,has made all of us unaware of the dangers arising from over confidence.If I had been living in the US I would probably feel exactly the same as most of the US,after 50 years of good living.Everthing on this earth occurs in cycles.and I believe that we are reaching the bottom of this event,Time for everyone to stop moaning and take stock.God willing everthing will get better,but will we have learned anything from our mistakes of the past 50years?? That is the 64 dollar question.

  14. January 20, 2010 at 4:22 pm

    Hello, I am currently attempting a website in the uk which is attempting to dissipate many of the myths around debt and of the enormous lack of choice that many people have encountered, particularly with regard to housing.I read your site with interest as, on radio 4 this morning, I heard that the cost of housing in this country (the UK) has risen by 273% in the last fifty years. I think the last ten years has been devastating economically. My partner and I who are both university educated and both have ostensibly ‘good’ jobs are simply unable to make ends meet. We have two children and although we are lucky enough to have the National Health Service in this country (which nearly everyone uses), the cost of housing, (if one does not have parental backing)is enormously prohibitive. We are not alone, we are aware of many others in a similar position, one friend has just gone to live on a boat with her two children. There is a possibility that the ‘American Dream’ of home ownership and, to some extent the British, may simply no longer be sustainable. It would be healthier, I think to look at the European model, where private renting is much more tightly controlled by the Government and renters have many more rights than they do in this country or, I’m guessing, America. Thanks for your site, encouraging to know that there are discerning and circumspect people out there! x

  15. 15 Dink Singer
    February 8, 2010 at 8:05 am

    Automobiles were frequently purchased on credit in 1957 and much earlier. My parents purchased a new 1956 Ford that was financed by an installment loan from CIT. CIT began making auto loans in 1916. GM and Chrysler started selling cars on credit shortly after that and Ford finally broke down and started offering installment credit in 1927.

    • 16 bob27
      January 31, 2012 at 5:53 am

      Dink Singer, yes you could buy a car on credit in 1957 , but it was hard to qualify, particulary if you were buying a home and your wife was of child bearing age. I know, I was there.

      Bob27

  16. 17 Penny
    March 19, 2010 at 4:54 am

    Does the cost of a house in ’57 vs. ’06 taking into account the home’s general characteristics, like square footage, bedrooms, bathrooms, etc.? Comparing my grandma’s home (3 bed, 1 bath) to homes bought by my friends/siblings (I’m 29), it seems that our generation has to have it all now. The 5 bed, 3 bath, 2 car garage home in a nice suburb. If that’s the case, I’m less sympathetic to rise of housing cost plight.

  17. July 18, 2010 at 4:08 am

    Recently in my local newspaper, the fees for building a house in Modesto California were $60,000 due and payable before you even turn a shovel of dirt to begin building. These kind of use fees are unreal and add to the costs of housing greatly.

    I do agree, our generation wants a much bigger home than our fathers and grandfathers. I also agree, with 2 people in the workforce per family, essentially what we have seen over the last 50 years is a reduction in our standard of living in half. Taxes for the rich are not equitable in a our society compared to 1957. The rich got rich from the infrastructure of this country which we all paid for and they received the most benefits. By infrastructure, beyond roads and electricity, I also mean a stable government backed by a capable military.

    There are expense items that are now standard that were either not standard or not controlled by monopolies in 1957. Telephones were regulated since they were a monopoly. Since deregulation phone companies have all merged back together and represent and unregulated monopoly today. We watched TV for Free in 1957, now at least $50 a month for not much more than in 1957. Health Care Costs are crazy and there were a lot more options for health care in 1957. The American Medical Association, Dental Associations and pharmaceutical industries have lobbied to have laws pass restricting anyone outside of their control to cease and desist. I can go on, but I think that in 1957, the world was a little better place to live.

  18. August 11, 2010 at 3:33 am

    Very good article; one thing that is significant is left out. The cost of health care has also gone through the roof. When I was born, my parents could afford to get sick. Now no one can (even with insurance). By the way, one of the major causes of the incredible debt facing US citizens is health care debt.

  19. August 31, 2010 at 1:34 pm

    Improve Your Credit Score

    One thing to improve your credit score is to maintain your credit report. Make sure all the minimum payments of your credit getting paid on time for at least last 12 months. If you are planning to buy new home in the future, please don’t take new loans for it as because it will harm you credit score rating. You can continue your fist loans by adding up your amount of credit and set the monthly payment at affordable cost. This will boost your credit score in the future as long as you can maintain your monthly payment on time.

  20. 21 nitin
    September 28, 2010 at 3:15 pm

    hi nice …. i have 1 rs note of 1957

  21. 22 GGG
    May 21, 2011 at 11:27 am

    I just wanted to say how much your information has helped me with my project

  22. January 16, 2012 at 5:19 am

    Hey There. I discovered your blog the use of msn. That is a very well written article. I’ll be sure to bookmark it and return to learn extra of your helpful info. Thanks for the post. I will certainly return.

  23. 24 Jovhank
    February 22, 2012 at 12:50 am

    A 1957 buck is 7,31 2007 US dollars.
    So, the effective average income was 36 000$, in 2007 dollars.
    Compared to the gap between the 5000$ previously annonuced.

    Anyway, awesome work to dig it out!

  24. July 6, 2012 at 1:12 am

    Statistical Links (I’m sure there are thousands more) – housing: http://goo.gl/4b0Wk Wages: http://goo.gl/ELXdH In the past as is now ‘where’ you live makes a difference in economies.

  25. 26 shaleisha
    July 18, 2012 at 8:57 pm

    Shaleisha Martin
    I would be a lot more careful of what i spend my money on,and start saving a whole lot.

  26. 27 Dave
    August 27, 2012 at 7:39 pm

    A house where I live can be gotten for 30-50k. That’s with new roofing and 2012 standard of living. We can get a “fixer upper” for 20-30,000 that is in 1950’s or 60’s living condition. This is in Maine. $50 a month on internet gets me free movies, TV, gaming, videos, phone and social interaction. How much did people pay for movies and games back then per month? I know that they got much less with their $5? or so, but what did the average person spend? Do you know?

  27. 28 Judith Stevens
    October 8, 2012 at 2:09 pm

    Is there a chart of the cost of living increase over the years? Our debt makes our dollar low so that has to be considered.

    What will a dollar be worth thirty years from now?

    I know the cost of living index does not include what it cost to live. Food and housing is now very high yet we get little increase in SS or pensions,etc.

  28. January 4, 2013 at 8:54 am

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    • 32 mercyman53
      August 5, 2013 at 9:53 am

      The material is a little outdated and much has happened in the 6 years since I first posted this. Unfortunately I don’t keep up with this stuff like I once did. Sorry.

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  35. 38 Ken
    December 11, 2013 at 11:07 am

    Where did you get a house costing $2,330? I really doubt this is correct.. almost everyone who had lived back then would have owned a house if that were true (and many amercians did not own houses). Take a look a this site, it shows the housing prices, car prices, and salaries remain relatively reasonable in comparison to today. (It shows a house costing $20,164 in 1975, about 10x that of a car and 5.5x the average persons income)

    http://thecostofliving.com/index.php?id=113&a=1

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